Maytas Infra FY08 revenues seen at Rs 1,600 cr

October 25, 2007

Teja Raju, Vice Chairman, Maytas Infra said that FY08 revenues are seen at above Rs 1,600 crore while profits are seen at over Rs 100 crore. He added that EPS for FY08 will be seen at Rs 18-19.

According to Raju, they have an order book of Rs 4,500 crore, mostly to be executed in 18-24 months. He added that they have no intentions of entering into real estate and that they intend to focus on construction.

Raju said that they have tied up with a Thai company for the Hyderabad metro projects. He added that they are looking at tie-ups for small projects in South and North India.

Excerpts from CNBC-TV18’s exclusive interview with Teja Raju:

Q: What kind of numbers are you looking at in FY09 given the kind of order book that you have on hand now?
A: We did revenues of about Rs 800 crore last year. We are looking at maintaining 100% growth, so about 100% last year’s growth is what we are looking at.

Q: You are saying that you’ll do Rs 1,600 crore in FY08?
A: We’ll do close to Rs1,600 crore profit, would go by that percentage. We did Rs 53 crore last year, so hopefully it would be double than this year is what we looking at.

Q: So you will probably deliver more than Rs 100 crore in net profit at the end of this fiscal year?
A: That’s true, that’s what we are hoping to do. We are on track and we are very confident that we should be able to achieve that.

Q: That is pretty much higher than our estimates, if you do a Rs 100 crore plus on net profit, what’s your own target on an earnings per share as a company?
A: 18 or 19 is what I think the market is, so we should be around that.

Q: Can you explain to us what’s contributing to this big growth that you expect in this financial year and what is your order book and how much of it gets executed within this year to bring your revenue up to that figure?
A: We have an order of about close to Rs 4,500 crore and this order book is spread across sectors like the road sector, the irrigation sector, oil and gas pipeline and power division. Most of the order book are supposed to be implemented over the time frame of 18 months or 24 months. All these order books have crossed the initial hurdle of globalisation, which would typically take longer time. So this is where we are quite confident about the numbers, which we are projected on.

Also lot of new work is coming out in these sectors, especially the power sector and oil and gas sector where we expect lot of orders to be called from the government. So if we can win a few more orders this would ensure that we have achieved these numbers.

Q: You have no designs of getting into the real estate business?
A: No, we are not getting into real estate, we want to be focused on infrastructure, that is construction and BOT development project.

Q: What kind of visibility do you have for the next year, FY09? Do you expect it to continue to grow at a 100% even next year or this year or the growth rate should moderate somewhat?
A: Lot of it depends on the kind of order, which should be called up by the government. Especially, next year being the election year. There would be many aggressive contracts coming up from the government or there might be a bit of a slow down. It would be very difficult to credit so far, but in the last couple of years things look good but election year is always a bit difficult to credit.

Q: You’ve got a couple of interesting tie-ups as well for the construction side. Can you just talk about who you have tied-up with and do they kick off within the next four to six months?
A: We have tie-ups, both in the construction side as well as the infrastructure development sector. In infrastructure development we have qualified for the metro rail project in Hyderabad. We have tied up with the Italian-Thai of Thailand over there. For some small airports in Karnataka, we have tied up with Vienna airports. The government has announced a couple of airports in the North recently, so we are looking at new tie-ups over there. In the construction side, we work with a lot of companies, Nagarjuna Construction is one of them, Gayatri Infra, Soma Construction. So these are the various partners we have.

Source: moneycontrol

Written by ITW Editor · Filed Under Investment and Finance, Media

MSK Projects expects Rs 455 mn from Jalandhar project

October 24, 2007

Baroda-based MSK Projects (Q, N,C,F)* (India), a significant player in BOT projects, completed the construction of the Jalandhar bus terminus that handles the interstate and intrastate, private and government passenger bus vehicles of Jalandhar.

The project is expected to add Rs 454.86 million to the gross revenue of the company over a period of 7 years. The BOT (build, operate, and transfer) project will earn revenue for the company in the form of terminus fees, lease rentals of shops, passenger amenities, advertisements and parking fees. The traffic at this terminus is on an average 3,000 buses per day increasing at an average rate of 3% per annum thus making the project an excellent one.

“We are glad to provide quality infrastructure to the once cramped bus terminal which will help organize the traffic and provide recreational facility to the travellers. Transport being a key source of increased trade and commerce, the revamp of the Jalandhar terminus will not only improve the state productivity but also check the leakage of revenue“ said Amit Khurana, executive director, MSK Projects (India).

The company is in the process of completing a water supply project for Dewas Industries in M.P. This is the first water supply project executed purely on a public – private partnership basis. MSK Projects is also on the verge of completing the construction of Ludhiana Bus Terminus.

MSK Projects (India) is a civil construction company executing infrastructure contracts such as building roads. The company entered the field of industrial construction and undertook works such as mass housing and township, multi-storied buildings, industrial projects for coal mines, fertilizer plants, petrochemicals, water retaining structures, and have also successfully executed them. It is well established today in the field on infrastructure development, particularly roads on build- operate & transfer (BOT) basis.

Shares of the company declined Rs 1.10, or 1.07%, to trade at Rs 101.5. The total volume of shares traded was 13,921 at the BSE. (2.16 p.m, Wednesday)

Written by ITW Editor · Filed Under Investment and Finance

IDFC buys 48.4% in SMS Shivnath Infrastructure Ltd

October 22, 2007

SMS Infrastructure Ltd. and IDFC announced today that IDFC has purchased 48.4% equity in one of its SPV viz. SMS Shivnath Infrastructure Limited (SSIL). SSIL owns, operates and maintains an 18.4 kms 2-lane road on National Highway 6 which serves as a bypass to the city of Durg in Chattisgarh. The concession was awarded in 1997 by NHAI under a BOT format, and extends until 2031. The project is amongst the first concessions awarded by the National Highway Authority of India (NHAI).

Speaking on the occasion, Mr. Anand Sancheti, Managing Director of SSIL, said that “participation by IDFC, a leading financial institution in the infrastructure sector, in the equity of a Group company, reconfirms our business philosophy of creating enduring value in our businesses. This investment also marks the starting of a partnership approach, which would foster aggressive growth in the years to come in the chosen fields of road, waste management and power which the Group has embarked upon.

Dr. Rajiv Lall, MD & CEO of IDFC remarked “Our investment in SSIL is part of an important initiative to set up a new infrastructure fund to invest in the equity of operating and greenfield assets. SSIL will be one of the seed assets for this fund. IDFC will work with companies like SMS Infrastructure Ltd. to help in the creation and operation of infrastructure assets.”

Mr. M. K.Sinha, President & CEO of IDFC Project Equity Company Limited, remarked “The investment in SSIL is part of our build up of seed assets for the India Infrastructure Fund. We look forward to working with the SMS Group in building quality infrastructure assets in India.”

Source: moneycontrol.com

Written by ITW Editor · Filed Under Investment and Finance

MSK Projects raises 336 mln rupees

October 22, 2007

MUMBAI (Reuters) – Construction firm MSK Projects India Ltd said on Monday it had raised 336 million rupees through a preferential issue to a private equity firm, which would help it bid for bigger toll projects.

MSK said it had issued 4 million shares to Subhkam Ventures at 84 rupees each, raising the latter’s stake in the company to 24.26 percent. Subhkam will now make an open offer for another 20 percent at the same price.

“We need money for our development. We have an existing relationship with Subhkam, so we agreed to this,” MSK’s Managing Director Ashok Khurana told Reuters. “We will be using this money for our BOT (build-operate-transfer) projects.”

The Baroda-based construction firm has forayed into toll road and water distribution projects and is also developing a couple of bus terminals. It has completed seven BOT projects and is currently doing two toll road projects.

After the fund infusion, the company will be able to bid for larger projects, Khurana said. It is also working on raising 3.5-4 billion rupees as debt for this purpose. “After this deal, the funding process will be completed,” he said.

Subhkam said it had not decided whether to take up a board representation, but retained an option for one board seat.

MSK shares, which hit a day’s high of 101.40 rupees on the news, ended at 100 rupees, up 3.5 percent in the Mumbai market.

Written by ITW Editor · Filed Under Investment and Finance

CARE assigns A+ rating to NCD issue Era Infra Engg

October 4, 2007

CARE has assigned a ‘CARE A+ [Single A (Plus)]’ rating to the proposed Non Convertible Debentures (NCDs) aggregating Rs.100cr. of Era Infra Engineering Ltd.(EIEL), formerly known as Era Constructions (India) Ltd. These NCDs would be redeemed in 8 quarterly installments in 2nd and 3rd year from the date of allotment. Instruments with this rating are considered to offer adequate safety for timely servicing of debt obligations. Such instruments carry low credit risk.

CARE has reaffirmed a ‘CARE A+ [Single A (Plus)]’ rating to the Secured NCDs aggregating Rs.50cr. of Era Infra Engineering Ltd. (EIEL). . Instruments with this rating are considered to offer adequate safety for timely servicing of debt obligations. Such instruments carry low credit risk.

CARE has reaffirmed a ‘CARE A+ [Single A (Plus)]’ rating to the Unsecured NCDs aggregating Rs.100cr. of Era Infra Engineering Ltd. (EIEL). Instruments with this rating are considered to offer adequate safety for timely servicing of debt obligations. Such instruments carry low credit risk.

The ratings take into account EIEL’s experience in diversified construction activities, strong pre-qualification credentials, increasing order book position resulting in improved financial performance, reputed clients and positive outlook for the construction sector. However, the rating is constrained by increasing working capital requirements given the aggressive growth, increasing investment requirement for BOT projects, vulnerability to increasing competitive pressures given its relative size and inherent cyclical trends associated with construction sector.

EIEL, the flagship company of Era Group was incorporated in September 1990, promoted by Mr. H.S Bharana, a civil engineer by profession, having more than two decades of experience in construction industry. The company is engaged in construction activities of infrastructure, institutional, industrial, commercial and housing. EIEL has executed 65 projects in the last 16 years valued at Rs.650cr.

Total operational income of the company has increased 99% and 145% in FY’06 and FY’07 respectively due to increase in average contract size and its ability to execute projects as per time schedules.

Consequent to the increase in the total income, profitability of the company has also been rising consistently. PBILDT margin during FY’07 have increased from 15.64% to 18.35% due to increase in ticket size of the contracts and changing project mix towards high value turnkey contracts.

Overall gearing, however, has increased as on Mar 31, 2007 on account of issue of FCCBs and increase in borrowings to meet capex, investment in BOT and working capital requirements. On excluding FCCBs, overall gearing improves to 1.68 as on Mar 31, 2007.

EIEL has raised USD 75 million (Rs. 326 crs) through FCCBs in Jan’07 to fund capex plans and investment in BOT projects. As per FCCB terms, the conversion price will be decided in Jan’08 and conversion process would commence from Mar’08.

EIEL has issued 55 lakh fresh warrants to promoters and associates in May 2007 at a price of Rs.425. Application money equal to 10% (Rs.23cr.) has been received at the time of issue of these warrants. These warrants would be converted to equal number of equity shares in Nov 2008, expected to bring Rs.210cr. Besides, existing warrants issued in Dec 2005 at a price of Rs 135 would contribute Rs.48cr. towards equity in FY’08.

Liquidity as measured by current ratio is satisfactory at 2.78 times as on March 31, 2007. Company’s working capital requirements have been mostly funded from the borrowings during the year. Going forward, the liquidity of the company is likely be under pressure on account of increasing order book position, working capital intensive nature of operations, increasing order book position and increasing investments in BOT projects.

Source: moneycontrol.com

Written by ITW Editor · Filed Under Investment and Finance

IRB Infrastructure to tap market with 5.1 crore share float

October 4, 2007

MUMBAI: Another infrastructure to realty developer has sought the market regulator’s permission to tap the capital markets.

IRB Infrastructure Developers Ltd has lined up 5.1 crore share equity offering of Rs 10 each through 100 per cent book building process.

IRB Infrastructure was formed to fund the capital requirement of the IRB Group’s initiatives in the infrastructure and construction sectors. It has extensive experience in roads and highways and is working on build/own/transfer projects like the Mumbai-Pune Expressway and Bharuch-Surat section of National Highway 8. It has also diversified into real estate development.

As a part of its business strategy, the company now proposes to invest in its subsidiary IDAA and make prepayment and repayment of its existing loans and the subsidiaries through the net proceeds.

In January 2007 it formed a consortium with Deutsche Bank AG Singapore Branch to jointly bid for certain road infrastructure projects.

The Hong Kong branch of Deutsche Bank, Jade Dragon (Mauritius)-a subsidiary of Goldman Sachs, and CPI Ballpark Investments of Merrill Lynch each hold 3.85 per cent stake in IRB Infrastructure.

Deutsche Equities India and Kotak Mahindra Capital are book running lead managers to the issue.

Written by ITW Editor · Filed Under Investment and Finance

IRB Infrastructure files DRHP with SEBI

October 3, 2007

IRB Infrastructure Developers Limited, an integrated infrastructure development and construction company in India with significant experience in the roads and highways sector, proposes to enter the capital markets with a public issue of 51,057,666 Equity shares of Rs 10 each through 100% book building process.

It has also diversified into the business of real estate development sector. It has filed DRHP for this purpose with SEBI. Deutsche Equities India Private Limited is the Sole Global Coordinator and BRLM for the Issue and Kotak Mahindra Capital Company Limited is the Co-BRLM for the Issue.

IRB Infrastructure Developers Limited is the holding company of the IRB Group. The Company was formed to fund the capital requirement of the IRB Group’s initiatives in the infrastructure and construction sectors. Its infrastructure development portfolio includes several large BOT projects in the road sector, including the Mumbai-Pune Express Highway and NH.4 BOT project and the BOT project for the Bharuch to Surat section of NH.8. In January 2007.

It has formed a consortium with Deutsche Bank AG Singapore Branch to jointly bid for certain road infrastructure projects.
As a part of its business strategy, the company now proposes to invest in its subsidiary IDAA and make prepayment and repayment of existing loans of the Company and the Subsidiaries through the net proceeds of the Issue.

Deutsche Bank Hong Kong Branch, Jade Dragon (Mauritius) Limited (a subsidiary of Goldman Sachs) and CPI Ballpark Investments Limited (a subsidiary of Merrill Lynch) each hold 3.85% stake, and Somerset Emerging Opportunities Fund hold 0.54% stake in the equity share capital of the company.

The Company’s infrastructure development business involves construction, development and operation of infrastructure development projects. It is an established infrastructure company in the roads sector in India and has a large portfolio of completed and operational BOT projects in the Indian road infrastructure sector.

The Company’s construction business complements its infrastructure development business and involves engineering, procurement and construction work for construction project on a contractual basis, including in the roads sector.

Source: indiainfoline.com

Written by ITW Editor · Filed Under Investment and Finance

NKG Infrastructure Limited files DRHP with SEBI

October 3, 2007

NKG Infrastructure Limited (the “Company”), an ISO 9001:2000 Certified Construction Company, engaged primarily in execution of infrastructure projects like Highways, Roads & Bridges, Extension and Grading of Runway at airport, errection and installation of power sub-station and construction of buildings has filed its Draft Red Herring Prospectus (“DRHP”) with the Securities & Exchange Board of India (“SEBI”) to enter the capital market with its initial public offering of equity shares. At present, it is executing 67 projects including projects in joint ventures across various states in India. The value of projects under execution is Rs. 526.87 cr.

The Company proposes to issue 63,00,000 equity shares (the “Issue”) of Rs. 10 each for cash at a price to be decided through a 100% Book-Building process constituting 44.41% of the fully diluted post issue paid-up capital of the Company. The objects of the Issue are to deploy the proceeds for funding the capital expenditure requirements, investment in joint venture & BOT projects & augmenting the working capital resources.

The Equity Shares are proposed to be listed on the Bombay Stock Exchange Limited and the National Stock Exchange of India Limited. The Book Running Lead Manager (“BRLM”) to the Issue is SPA Merchant Bankers Limited.

Incorporated in 1989, the Company is engaged primarily in execution of infrastructure projects and civil construction projects. Recently the Company has diversified into installation and erection of electric substations, with project for installation / testing / commencing of external electrical works in Gomti Nagar, Lucknow. The major projects of the Company are in the state of Uttrakhand, Uttar Pradesh and Madhya Pradesh. It is also executing/executed projects in the states of Haryana, Punjab, Gujarat, Himachal Pradesh & Pondicherry. Its major clients include Public Works Department & other agencies of various state governments & development bodies like Noida Development Authority, Lucknow Development Authority, Ghaziabad Development Authority, etc. It is also executing project for Airport Authority of India in joint venture for extension and grading of runway at Pant Nagar airport. The private sector clients include construction companies like Era Construction India Ltd., Nagarjuna Construction Company Ltd. and Marg Construction Ltd.

Source: moneycontrol

Written by ITW Editor · Filed Under Investment and Finance

Subscribe to Maytas Infra, looks reasonable: India Infoline

October 3, 2007

Maytas Infra, a construction and infrastructure development company, is open for subscription with an initial public offering of 88.5 lakh equity shares of Rs 10 each for cash at a price to be decided through a 100 per cent book building process.

The issue will close for subscription on October 4, 2007. The company has fixed the price band between Rs 320 and Rs 370 per equity share.

India Infoline report on Maytas Infra IPO

Investment rationale

Diversified portfolio with pan India presence

MIL construction portfolio is diversified across six sectors including irrigation, roads and bridges, buildings and structures, power, oil and gas, and railways. Their infrastructure development projects are into power, road and port sectors. These 11 BOT projects are geographically widespread through 12 states in India.

Along with national presence they are exploring international opportunities in construction space; they have established a joint venture with Dhabi Contracting Est. in Dubai in December 2006.

Investment in infrastructure to witness a CAGR of 13.8%

India is the fourth largest economy in the world in GDP terms on the basis of purchasing power parity. Over the last decade, India has been one of the fastest growing economies in the world with a real GDP of 9.2% in FY07. Infrastructure has been a big contributor. This growth is visible in roads, bridges, airports, commercial buildings, townships, power systems, rural and urban development.

According to the Pre-Budget Memo 2006- 07 prepared by the Construction Federation of India, construction is the second largest employer after the agriculture sector. Currently, the construction industry in India, directly or indirectly, employs approximately 32mn workers, accounts for 40% of gross investment and 60% of infrastructure costs.

According to CRIS INFAC, investment in construction is expected to grow to approximately Rs 6,129 billion in 11th five year plan from Rs 3,213 billion in 10th five year plan at a CAGR of 13.8%. The construction segment constitutes a significant part of infrastructure development in the economy.

The infrastructure boom is also likely to help construction companies. Government initiatives in the form of developing national highways, golden quadrilateral, and setting up public –private partnerships and BOT models are likely to attract strong investment in the infrastructure sector.

Healthy order book position of 5.6x FY07 revenue

MIL has a healthy order book of Rs 35.8 billion, 5.6x FY07 revenues as of June 30, 2007, inclusive of its joint venture projects. On a standalone basis, the order book stands at Rs 26.9 billion, 4.2x FY07. It also includes higher-margin construction contracts in the power, oil and gas, infrastructure and railway sectors. MIL has also placed a bid for lift irrigation projects rather than for purely irrigation contracts. Irrigation construction contracts account for maximum contribution to the revenue.

Risk and concerns

Price fluctuations

MIL has contracts on fixed-price, lump-sum or item-rate basis, the company is exposed to price escalation in construction materials, fuel and equipment.

Controlling interest

MIL holds less than 50% of controlling interest in most of its SPV projects.

Single supplier

The Gautami power station and the KVK Nilachal power station rely on a single supplier, GAIL and Mahanandi Coal Fields respectively, for fuel as well as external operators for their operation and maintenance. Any disturbance in supply would affect their operations.

New entrance in infrastructure

MIL is very new in the infrastructure sector. It has completed only one road project till date in this vertical.

Government policies

A substantial part of MIL’s revenue has been from government projects. Any change in the political or financial policies will directly affect the company’s operating margins.

Recommendation

Based on an order book position of Rs 35.8 billion and an aggressive foray into the infrastructure sector with 11 BOT projects, MIL seems to be fundamentally strong. On a post issue basis, considering the EPS of Rs.9.4, the issue is available at P/E at 34.2x lower price band and 39.6x upper price band. The issue looks reasonable at both the ends compared with its peers. We recommend Subscribe.

Written by ITW Editor · Filed Under Investment and Finance

D.S.Constructions to Deploy SAP

October 1, 2007

D.S.Constructions, a part of the D S Group, through its innovative and selective strategy has established itself in the infrastructure development sector. The company is a pioneer in BOT infrastructure development and engineering with projects under execution in the highways, expressways and railway, and hydro power. It’s now pursuing privatization of airports and ultra mega power projects, Special Economic Zones (SEZs), etc., in a short span of 5 years.

The company growing at a fast rate felt that it would be possible to keep pace with growth only with the introduction and use of good IT tools. The technology selection parameters of D.S.Constructions are investment protection, past history, future roadmap, and support.

“We’re little late in IT deployment, however, we’re now doing overtime to catch up. As a first step, we’ve started our SAP implementation for ERP along with creating a good IT infrastructure,” stated C.R.Narayanan, vice president (IT) of D.S.Constructions.

Commenting on the deployment, he further added, “We evaluated various vendors like SISL and Wipro before zeroing in on SAP. IBM is our implementation partner for this. The deployment starts on October 3, 2007. In addition, for our WAN bandwidth, TULIP IT is our partner and for WAN equipments, Fortinet is partnering us.”

The company is taking all measures beforehand so that it doesn’t land into any problems later on. “There aren’t many IT deployments in infrastructure development phase in India. We need to suitably modify the global best practices to the Indian environment,” said Narayanan.

With businesses spread across, the centralized system would help the company in gathering data and will also enable it to connect anytime, anywhere, thereby helping it to determine the status of materials at the various project sites. The cycle time would be reduced and the implementation would determine availability of information, alerts, and knowledge repository.

The company predominantly deploys packaged applications and only for very specific applications it develops bolt ons.

D.S.Constructions believes that HR and IT work very close. “A HR portal is under deployment which would address induction, appraisal, helpdesk, MIS, and staffing. This is a hosted solution, which is from HR Mantra of Mumbai. The deployment will start in 15 days from now,” said Narayanan.

Spending around 2-3% of its revenue, the IT expenditure estimated by the company for this year is about Rs.4 crores. With the growth of its business in the coming years, it expects this expenditure to grow further.

The company has presently taken a pilot project of SAP implementation, which is expected to go on till end of 2008. Hence, all other extended IT iniatives of ERP would be considered for deployment by mid-June or -July, 2009.

Written by ITW Editor · Filed Under Investment and Finance

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